Perfect fit company sells hand-sewn shirts for $40 per shirt. it incurs monthly fixed costs of $5,000. the contribution margin ratio is calculated to be 20%. what is the variable cost per shirt?
The variable cost per shirt is $32.
Solution:
Contribution margin ratio 20% Sales price per shirt $40 Contribution
Margin = $40 x 20% =$8 Variable
cost per shirt $32 Variable cost is a company expenses which varies on the
production outputs.
